Policy paradigms

AFTER three decades of conflict Sri Lanka has the right to aim for lofty development goals. Yet in this journey identifying the key points for attention can be a challenge. Few speeches dealt with this need as succinctly and in depth as the recent address by the World Bank Managing Director during a visit to Sri Lanka.

Delivering a keynote address at the Central Bank’s 60th Anniversary Celebrations titled “Becoming the Wonder of Asia: Accelerating Inclusive Growth in Sri Lanka” Dr. Ngozi Okonjo-Iweala dwelt on many points that policy makers would do well to pay attention to as well as admonishing the policy makers themselves to be aware of the importance of including vulnerable groups into the development drive.   

Pointing out the need for private investment both local and foreign, the Managing Director highlighted the need for a high rate of investment and told Sri Lanka to set time lined goals of what to achieve and how. Improving on the tax reforms and building on its success by tackling some of the other well known constraints to doing business, such as weak enforcement of contracts and difficulties registering property were recommended by her.

Alongside policies to improve investment must be policies to improve the productivity of these investments. Such policies can be directed at spurring physical and human capital to work more efficiently together. In other words how can we get more from what we already have? Given the recent Treasury report that revealed 55% of development projects are delayed and have incurred overruns one cannot disregard the importance of this advice.

Stronger innovation policies are also essential. Policies to promote “imitation” and the discovery of doing new things or doing old things in new ways could perhaps be the answer. This may mean better management practices or simply getting into new areas of production or export. In this regard innovation is more related to discovering entry points to new markets, searching for the right product, the right technology or services that might have been innovated elsewhere and adapting them so that they generate returns under local conditions.

In all cases of sustained, high growth, the economies have rapidly absorbed technology and more generally, knowledge from the rest of the world. These economies may not have originated this knowledge but are most adept at using is productively. This can then be used to enter new markets not just in the BRIC countries but Latin America, Africa and former Soviet Union nations that are also expanding rapidly. Exchanging ideas with these countries can assist Sri Lanka to increase exports despite the global financial crisis hangover facing EU and America.

Rationalising incentives under the Board of Investment (BOI) will be important. This will pave the way for importing knowledge through Foreign Direct Investment. Exporting world class services is also making its mark. Tourism, health and other sectors can be earmarked in this regard.

The zenith of this pyramid is occupied by peace. Inclusive development will ensure that there is a concentrated drive towards achieving and maintaining peace. History has shown that communities left behind are the first to attempt derailing the economic growth process. The WB Managing Director insisted that the opportunities of Sri Lanka would best be met through a fair, transparent and accountable development process that would give equal opportunity.